Do governments in the emerging Asia and Pacific region independently set corporate tax rates? This paper answers the question and contributes to the growing empirical tax competition literature by (1) generating a predictable tax reaction function considering the ‘lumpy’ nature of economic...

This paper proposes a novel Lasso-based approach to handle unobserved parameter heterogeneity and cross-section dependence in nonstationary panel models. In particular, a penalized principal component (PPC) method is developed to estimate group-specific long-run relationships and unobserved...